Why I don’t Touch SGX Stocks

People who follow me should know by now I invest in US stocks and European bank bonds. I have cashed out of all my SGX stocks since 2017.

I’m a born and bred Singaporean. I earn in SGD. Why wouldn’t I invest in companies in my own country and currency?

Well, actually I have. I dipped into the Singapore stock market when I was 16, going through my mum’s trading account. That was about 20 years ago.

20 years later, I’m still smarting over those loses. I had held various positions in “star” names like Hyflux, Noble, Keppel, Cosco, Singtel, and Starhub.

I followed the expert advice of the day from analysts here, who gave all these stock market darlings rave reviews and buy ratings.

Now, they are all crap. More than a couple went through scandals, false reporting and manipulation. Hard-earned savings wiped out or stagnant. Supposedly high and stable 4%- 6% dividend payments rendered useless by big losses in the underlying capital. And even more crap has been exposed by the recent pandemic crash.

Dead in the water

I’m not a particularly bad stock picker. My returns have been in line with the STI’s performance, which is terrible by itself.

Look at the chart below. Returns on the STI (red line) have been stagnant since 2009. That means more than 10 years of dead returns. In comparison, see how the S&P 500 (blue line) diverges up sharply, especially after 2012. This is probably due to all the innovative tech names which emerged e.g. Amazon, Netflix, Facebook etc. Meanwhile, companies were delisting from the SGX, leaving with billions of value.

An expensive lesson

Looking back, I feel embarrassed that I wasted all those years on SGX stocks. If I had invested in US equities 20 years ago, I would have made 10 times my money.

So in 2017, I learned my lesson. I turned to investing in things I actually use and like. If a product is great, the company behind it is usually great too. This may seem very unsophisticated, but its true. I don’t really look at any financial statements or ratios when I invest. I go to Seeking Alpha, read a couple of articles to weed out red flags, and then execute. My only mistakes have been selling too early.

I use Google, Nvidia, Netflix, Amazon and Microsoft products every single day. And I like them. So I buy their stock. It has turned out well.

I would love to have a Singapore stock I can believe in and stash my SGD. But I can’t think of a single company here which makes products I like to use or is globally competitive. Maybe Singapore Airlines, but look at how that turned out. It has dropped from $10 in 2009 to less than $4 today. Spare SGD is probably better off in the CPF than invested in stocks here.

It’s great to invest. But it matters a lot what you invest in. I see a lot of discussion if its good to buy the STI and its components while things are cheap now.

While the STI can be considered cheap-er in comparison to a few months ago, the underlying bank and property counters are heavily affected by the economic situation. Business and construction costs will increase, and jobs will go down. I can’t see how it can be much improved anytime soon. Cheap can become and stay dirt-cheap.

Its also not a good premise to invest in things just because they have become cheaper. If you had invested in horses because they were dropping in price when cars came out, you would be stuck with a lot of horses and poop. The world had moved on to more innovative and less crappy products.

If you had invested in the Singapore market and made profits, that’s great. Hats off to you. But you are more likely to be the exception due to your skills and timing over the average investor. The historical chart and returns have been indisputably bad for the average SGX investor.

9 comments

  1. Nice read, and as you mentioned, great minds think alike as we wrote on the same subject n posted on the same day. Quite incredibly coincidental.

  2. Hi nice post, can check with your for individual US stocks …. like amazon or facebook, can use cpf to buy ? Btw what brokerage acct u use to trade and sell ?

  3. What is your take on the US that keep printing dollars resulting in trillions of debt.Do you think long term it will devalue it?

  4. excellent truth. my stockbroker friend went bust after 30 years as a broker. he says no broker in any countries can be so bad off than sgp.
    Most trades are riddled with insider trade that takes even the brokers for a ride. And the biggest insider is allow to trade its own stocks while controlling all business news release. !
    what a joke..
    Any serious investors left in the sgx now.

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